Impacts on key policy areas

The House of Commons Library published a detailed research paper in February 2016 looking at a range of policy areas and changes that might occur in the event of a the UK leaving the EU. A top line summary taken from this impact assessment is included below, focussing on areas of greatest interest to food and drink manufacturers.

Policy areas:


Agriculture

Departure from the EU would also mean withdrawal from the Common Agricultural Policy (CAP) and its subsidy and regulatory regimes and this would have a drastic impact. The CAP represents almost 40 per cent of the EU budget and the largest element of the UK's EU costs.

Leaving the regime would be expected to reduce farm incomes, as the Government and Devolved Administrations would be unlikely to match current levels of subsidy and/or would require more 'public goods' in return for support, such as environmental protection, which Government views as the overarching market failure in this sector. However, it could also bring wider benefits to the economy as a whole, as the UK would be free to negotiate bilateral trade deals and would have more flexibility on pricing.

Common Fisheries Policy

Some suggest fisheries management would be more effective if the UK opts to withdraw from the EU. One issue that would have to be determined from the outset of withdrawal is whether the UK would allow access by foreign vessels to the UK Exclusive Economic Zone (EEZ). If so, the UK would have to maintain a very close working relationship with the EU to enable the monitoring of landings and to co-ordinate on wider regulation in the sector. It would also have to agree a mechanism for agreeing catch limits. If the UK decided to exclude foreign vessels and assume full responsibility for fisheries in the UK EEZ, there would be a number of implications for the UK and the management of fisheries in the area.

There would also need to be a negotiation between the UK Government and devolved administration on how fisheries would be divided. Whichever approach was decided on the UK, as in other trade areas, would still in all likelihood have to comply with any EU import conditions and certification requirements to export fishery products to the EU, while having limited influence over what those requirements should be.

Consumer policy

The potential implications of an EU exit may be significant. Consumer protection covers a very wide range of goods and services and it is impossible to calculate the impact of withdrawal in any meaningful way without knowing the basis on which the UK would continue to interact with the EU.

A huge amount of UK consumer protection regulation is derived from the EU. For example, directives implemented in the UK protect consumers from unsafe products, unfair practices, misleading marketing practices, distance selling etc. If the UK sought to remain in the EEA, it would join the EEA/EFTA states (Iceland, Liechtenstein and Norway), which have participated in EU consumer programmes since the EEA Agreement came into force in 1994.

Employment

An EU exit could result in significant change to UK employment law, much of which flows from Europe. Government could face pressure to repeal or amend EU-derived employment laws, such as the Working Time Regulations 1998 and Agency Worker Regulations 2010.

Trade unions would probably strongly oppose any perceived rowing back on rights originating from the 'Social Chapter'. Withdrawal from the EU might allow for change to the following areas of employment law, which stem largely from Europe: annual leave, agency worker rights, part-time worker rights, fixed-term worker rights, collective redundancy, paternity, maternity and parental leave, protection of employment upon the transfer of a business and anti-discrimination legislation.

The Balance of Competences review investigated the impact on the UK of EU employment legislation. The report was published in July 2014, and noted mixed views on EU employment and social competence. Employee representatives were supportive of an active EU social policy, whereas business representatives were more ambivalent.

Businesses saw EU competence in this area as not altogether undesirable, given potential savings in transnational compliance costs, but criticised the tendency of EU legislation to be “solely focused on further regulation and tightening or extending existing law, and not upon its impact upon jobs, growth and businesses”. The review found somewhat conflicting evidence as to whether this approach would continue, with indications that the EU is showing signs of a new, more deregulatory approach.

Energy and climate change

The Government is unlikely to want to reverse the trend for more transparency and a level playing field at EU level which is currently being implemented by the European Commission's Third Energy Package and by the 2015 Framework for Energy Union. An EU exit would not remove the legally binding UK climate targets under the Climate Change Act 2008 although it could increase focus on all aspects of UK-based generation. This could especially be the case if exit resulted in poorer security of supply through decreased interconnectivity to Europe, reduced harmonisation of EU energy markets, or less investment into the UK by multinational companies.

An exit would affect the UK's international climate targets under the United Nations Conference on Climate Change (UNFCCC). Currently the UK negotiates as a part of the EU block and has internally set targets that together with those of other Member States aims to meet the EU's overall target. Withdrawal from the EU would have to address that lack of a UK specific target under UNFCCC. It was also widely recognised in Government's competency review that negotiating as part of an EU block was beneficial as it had more influence at an international level than if individual Member States acted alone.

Environment

The environment is an area in which UK and EU law have become highly entwined. The effects of an EU exit would depend on whether the UK decided to lower, raise or maintain current environmental requirements in areas such as air and water quality, emissions, waste, chemicals regulation or habitats protection. If the UK left the EU, it would have more scope for changing environmental objectives in the UK and there would also be a less far-reaching judicial process to enforce the implementation of environmental policy and challenge its interpretation.

Food safety

Government's Competency Review noted that an extensive body of EU legislation on animal health, veterinary medicines, medicated feeding stuffs, animal welfare, food and feed safety and hygiene, food labelling and compositional standards has developed. This is mainly to facilitate trade and to provide the EU with comprehensive disease and food safety alert systems.

Many of these areas have international standards, food for example, where an EU exit would not greatly change standards. Some also already allow Member States to maintain stricter rules if they have them: e.g. UK slaughter rules and animal welfare. However, Member States also share expertise, intelligence and resources to support these systems. Without access to such resources the UK would have to replicate some of the services currently provided or seek to participate in them on other terms.

Health and safety

Over the last quarter century much of the UK's health and safety legislation has originated in the form of EU Directives – Article 118A of the Treaty of Rome gives health and safety prominence in the objectives of the EU. These Directives have built on the pre-existing UK safety systems underpinned by the Health and Safety at Work etc. Act 1974 and associated secondary legislation.

Over the years there have been concerns over the potential for overzealous application of modernised health and safety law, be it the result of “gold-plating” when transposing EU Directives into UK law or of misunderstandings as to what the law actually requires.

These concerns prompted the establishment of reviews by Lord Young of Graffham and Professor Ragnar Löfstedt and subsequent reforms by the Coalition Government. In his report, Löfstedt commented: “Many of the requirements that originate from the EU would probably exist anyway, and many are contributing to improved health and safety outcomes. There is evidence, however, that a minority impose unnecessary costs on business without obvious benefits.”

Innovation

The European Research Area (ERA) was launched by the European Commission in 2000 with the aim of co-ordinating research and innovation activities across the EU. ERA initiatives are developed through periodic framework programmes; the current programme, Horizon 2020, aims to allocate €80 billion for research and innovation from 2014 to 2020. Funding is allocated on a competitive basis through the European Research Council. UK universities are predicted to receive about £2 billion from Horizon 2020 in the first two years of the programme. The 24 Russell Group universities receive about £400 million a year in EU research funds – some 11% of their research income.

If the UK withdrew from the EU, the UK would probably lose access to EU research funding and student mobility schemes. Overall, universities and students would probably lose out – universities are very concerned about their research funding. If the UK withdraws and EU students are classed in the same way as overseas students and charged higher fees, this could have an impact on numbers coming to study in the UK and on fee income for universities.

Trade

The share of UK exports going to the EU has declined in recent years. In 2002 the EU accounted for 55 per cent of UK exports. Some argue that EU membership allows the UK to benefit from better trade deals than it would be able to negotiate on its own. On the other hand, EU membership entails some compromises and can limit the UK's ability to prioritise its own interests. Leaving the EU would allow the UK to set its own trade and investment policies but there could be costs in doing so on its own rather than as part of a group of countries.

Even outside the EU, the structure and orientation of the UK economy are likely to place important constraints on its capacity to reorientate its trade in the medium term. From a British perspective, the EU's trade policy does not appear to be wholly misguided in geographical terms. The EU is negotiating the Transatlantic Trade and Investment Partnership (TTIP) with the US which is by a long way the UK's largest export market.

The EU already has preferential trading agreements with Switzerland and South Korea and finished negotiating a trade agreement with Canada in 2014. The EU is also in negotiations with Japan and India. All these countries are among the UK's largest non-EU export markets. The EU already has preferential trading arrangements with 18 of the 52 other Commonwealth members and is in negotiations with many others. The European Commission has requested authorisation to negotiate free trade agreements with Australia and New Zealand.

Whether the UK's trade negotiating strength and efficiency would be greater outside the EU is uncertain. On the one hand, concluding deals might be easier for the UK alone, given the greater diversity of interests involved when the EU negotiates as a group. On the other, the smaller size of the UK market may mean other countries give higher priority to deals with the EU.

Transport

The UK would remain a member of the UN and its attendant agencies, and it is thus unlikely that the broad framework of UK law on aviation and shipping would change; similarly we would also likely apply those vehicle rules set down by the United Nations Economic Commission for Europe (UNECE). One could also envisage the UK and the EU agreeing to maintain common rules on driver and vehicle licensing to ensure continued free movement across the continent. The UK might negotiate an agreement with the EU on air routes, safety and security etc. There would likely be some areas where the UK would liberalise the arrangements agreed to across the EU.

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Last reviewed: 21 Nov 2017